Loan offering in Portland, Oregon

Tuesday, April 29th, 2014 at 9:54 am

Clay Sparkman

We’ve had a lot of nice solid little loans come in lately. (As you know, we have a tradition of, from time to time, presenting one of the loans that we have placed or are in the process of placing, so that blog readers can (a) see the types of loans that we are placing, (b) see how we feel that loans should be presented, and (c) be presented with potential investment opportunities.) Keep in mind that this is only the summary. If an investor expresses interest in reviewing the details of a loan, we put the prospectus on top of all of the relevant documentation and send it via e-mail in an Adobe file.

This particular loan is live and we are in the process of placing it as either a fractional or a whole loan, so if you are an accredited investor looking to put a relatively small amount into a fractional loan at this time, please let us know.

Term: 6 Months – with automatic monthly extensions (automatic extension not to exceed an additional 6 months) provided that the payments are timely and the loan is in good standing

Interest Rate: 12%

Monthly Payments: $1,900 Interest Only

Security: Deed of Trust in 1st Position security interest in real property located at xxx, Portland OR

Construction Holdback: $180,000

Projected Value by Borrower’s Estimate based on CMA: $285,000

Projected LTV by Borrower’s Estimate based on CMA: 67%

Loan Overview

yyy and zzz are the members of aaa, LLC, and will be personally guaranteeing this loan. Dave Sheldon is a licensed contractor and is the owner of his own construction company, Home Resources, LLC. zzz is very experienced in rehabbing houses and will be doing the work himself. His resume has been provided. To summarize the relationship between yyy and zzz – yyy is the numbers/financial guy with good credit/income and zzz is the contractor.

The borrowers purchased a lot in March of 2014 for $55,000, and have invested approximately $49,675 into the lot to divide the lot into 2 separate buildable lots, totaling $104,675. A list of these costs has been provided in the full packet for your review. It should be noted that $30,000 of the $180,000 construction holdback is allocated for site development costs reimbursed to the borrower through the draw process. Overall, they have a fair amount of skin in the game on this transaction.

The borrowers have secured a different private money loan for new construction on one of those lots, and are requesting this loan through Fairfield to provide funds for new construction on the other lot. It is their intention to build both houses together to reduce the costs.

The borrower’s intend to exit this loan with the sale of the property.

Pervious Projects with Fairfield

This will be the Third loan that we’ve done with John and yyy and zzz.

The first loan was a purchase rehab loan on a property in Salem, OR, with a construction budget of $22,000. All of their interest payments were on time, and the construction was completed under budget in approximately 3 months. The property has been sold, and the total length of the loan was approx. 8 months. The borrowers have posted photos of the construction by date (including the original pre-construction photos) which can be viewed at: http://s1062.photobucket.com/user/hisfinancing/library/Boulder/Boulder26JUN2013?sort=3&page=1 . Note – there are other projects on here as well. The Boulder property was the subject for the above mentioned loan.

The borrower’s will be building a 3 bedroom, 2.5 bathroom 2 story craftsman with a 1 car garage. The home will be 1,800 square feet, and on a 3,700 square foot lot. Plans for the property as well as a line item budget have been provided in the full packet for your review.

A CMA has been provided by the borrower’s realtor, which based on an average sold $/sf of $159, the borrower estimates a completed value of $285,000. This CMA has been provided in the full packet for your review.

Income

A signed 1003 has been provided. Yyy is stating a monthly income of $8,125, and a worth of $222,279. Zzz has stated an annual income of $60,000, and a net worth of $197,000

Credit

yyy has a mid-credit score of 722, with no accounts past due, and no accounts with any late payments.

Zzz’s mid-credit score was last reported (from the 1st loan) to be 485. He has reported that his credit is deteriorated because of medical expenses that he incurred in 2010. He has not yet been able to catch up with those bills.

Note – Initially yyy was going to guarantee this loan alone because he’s the only with decent financials. However, I told them that it would be more beneficial to have a weak borrower on the hook as well. Zzz’s personal financials and credit are not good, but his additional personal guarantee certainly doesn’t hurt.

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- Clay (clay@privatemoneysource.com, 503-476-2909 or 800-971-1858)

Clay is Vice President of Fairfield Financial, a primary source for private money loans since 1964. Fairfield works with a broad range of private money investors, in a broker capacity, finding, underwriting, presenting, closing, servicing, and when necessary, assisting in the workout of difficult loans.

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This blog deals with all aspects of investing in private money loans and hard money loans secured by trust deeds and real property, including underwriting, risk assessment, loan servicing, and workout/recovery.

Bio

I am Vice President of Fairfield Financial, and I have been coordinating private money loan transactions since 1992. I hold an MBA degree from Portland State University and a BS in Economics and Computer Science from the University of Oregon. I have two active blogs: The Private Money Investor and The Private Money Broker.